Currency and Economy News

Welcome to MoneyTransferComparion’s economy and currency news section. Our expert economist will be happy to provide you with a free overview of the most interesting things that happened last week in the world of currencies, as well as a prediction for next week’s happenings.

This section is slightly technical. If you need any assistance on international money transfer and how they work please view our FAQ. If you want to understand the basic concept behind how events impact currencies go here, Trade Account is explained here, technical analysis here, and we have also created top list events in history that impacted currencies for your pleasure.

 

In Depth Commentary on Current Events

  1. Our Brexit Survey March 24 – Read for Brexit prediction, by the people and by our experts.
  2. Our UK economy forecast with Boris Johnson as PM
  3. Our “the demise of the pound” series – against the Euro and against the U.S Dollar

Analysis and Prediction:

Date of publication: October 20, 2019 | Author: Tim Clayton

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Last Week’s Summary

World Economic News Review

US 

The latest retail sales data was weaker than expected while business surveys were mixed, but suggested that overall conditions were still firm.

There were mixed comments from Federal Reserve officials with an element of caution over the need for further interest rate cuts. Dallas Fed President Kaplan, for example, stated that the case for an October move was less certain than in July and September. 

Markets remained confident, however, that interest rates would be cut again at the late-October meeting with futures markets indicating over an 80% chance that there would be a cut next week.

Following the partial US-China trade deal, there was a dip in dollar demand on defensive grounds and confidence in other major currencies improved slightly with the dollar retreating to 9-week lows.

UK

The overall data releases were mixed with the headline inflation rate unchanged at 1.7% while unemployment increased slightly and wages growth slowed. Retail sales data was also close to consensus forecasts with a slight decline on the month.

Bank of England Deputy Governor Ramsden stated that higher interest rates would be back on the table if there was a smooth Brexit.

Despite significant data releases, political events dominated Sterling during the week

There was inevitably volatile Sterling trading ahead of the EU Summit amid major uncertainty whether the UK and EU could reach a new deal.

In the event, Prime Minister Johnson did secure a deal, but sharp Sterling gains were pared back after the Northern Ireland DUP stated that they would not support the deal in Saturday’s vote. Overall, the UK currency retreated from 5-month highs, but made significant net gains.

In the weekend House of Commons vote, an amendment was approved which would delay final approval of the deal until parliamentary legislation was completed. In response, the government dropped the main Brexit vote and requested a 3-month extension, but Johnson also wrote another letter effectively stating that an extension should be rejected.  The vote triggered a fresh round of uncertainty.

Euro-zone

The latest German ZEW data recorded a dip in business confidence, although the impact was limited.

The Euro was boosted by an element of optimism that there would be a Brexit deal while German bond yields continued to move higher. There was also a strong current account surplus, reminding markets of the strong structural position. 

International

Chinese GDP growth for the third quarter registered its weakest performance at over 25 years with 6% annual growth, although there was a recovery in industrial production growth which provided an element of relief.

Australian unemployment declined to 5.2% from 5.3% which helped trigger a recovery in the Australian dollar with a dip in speculation that interest rates would be cut further.

The Monetary Authority of Singapore (MAS) eased monetary policy slightly by reducing the rate of currency appreciation, although it also expected the economy to strengthen in 2020.

Next Week’s Forecast & Events

a Men Looking at Economic Forecast

US

US business confidence data will be watched closely with the Markit PMI data due on Thursday. The release will be watched closely, especially as the survey data should pick up some impact from the partial US-China trade deal.  The data will also be particularly important for confidence in manufacturing after a run of poor releases.

There should be no comments on monetary policy and interest rates from Federal Reserve officials ahead of the October 30th policy decision.

US political developments will still need to be monitored closely with US-China dialogue continuing to be an important market factor. A fresh deterioration in relations would trigger renewed support for the yen and Swiss franc.

UK

Political developments will continue to dominate after another turbulent week. At this stage, the government is planning to hold a meaningful vote in parliament on whether the new Brexit deal and this may be held on Monday or Tuesday.

A vote in favour would be a big boost for the government and the October 31st leaving date would be realistic. In this environment, Sterling would be likely to make further significant gains.

If the vote is rejected or delayed, there would be increased speculation over at least a slight delay and Sterling would suffer at least a short-term decline.

The EU’s stance on an extension will also be important and they are likely to wait and assess UK developments before making any formal decision.

Sterling volatility will inevitably remain high during the week given major swings in political sentiment. 

Euro-zone

The latest flash Euro-zone PMI data is due for release on Thursday. After very weak data last month, the latest data will be watched very closely and will have an important Euro impact. 

The ECB will also hold its latest policy decision on Thursday. Although no policy changes are likely, the meeting will be important as it is the final one for current President Draghi. In this context, his comments may be less guarded than usual. 

The German IFO index is due on Friday and any improvement would help stabilise market sentiment.

International

Canadian retail sales data is due on Tuesday and the Bank of Canada will release its latest business outlook survey on the same day. This survey will be important for the Bank of Canada policy decision due the following week.

Canada will also hold a general election on Monday.

Currency Forecast for Next Week

Currency pairSpot 1-week forecast1-month forecast
EUR/USD1.1161.1201.113
USD/JPY108.5108.8107.6
EUR/GBP0.8630.8460.850
GBP/EUR1.1591.1821.176
GBP/USD1.2941.3241.309
AUD/USD0.6850.6880.693
USD/CAD1.3141.3161.307
USD/SGD1.3641.3651.359
USD/HKD7.8437.8407.840
NZD/USD0.6370.6400.645
GBP/JPY140.4144.0140.9
GBP/AUD1.8891.9241.889
GBP/NZD2.0312.0692.030
GBP/SGD1.7651.8071.779
GBP/HKD10.1510.3810.27
GBP/CHF1.2741.3071.312
 timTim Clayton is a market analyst with more than 20 years of experience in the financial markets, with particular focus on currencies. Holds an economics degree from University of New York. Writes for multiple publications including Investing.com and SeekingAlpha so he is on top of all the happening in the world of currencies and macro-economics. 


Information expressed in this article and on MoneyTransferComparison.com as a whole does not constitute as financial advice. If you decide to make any actions based on the information you read, we shall not be held responsible.

 

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